IS GOLD A GOOD INVESTMENT FOR A CONTRARIAN LIKE ME?

QI am a contrarian investor who would like to invest in gold via amutual fund. Any recommendations? Might the easing of trade sanctionsagainst South Africa affect my decision?Stephen J. EmeryChesapeake, Va.AAs an investment, gold is packed with all the negatives that anydedicated contrarian craves. Since it tumbled from a high of $875 anounce in January 1980, it has hovered in the $350 to $450 range andwas recently trading at an anemic $357. And you can't mine anyglimmer of hope from the recent lifting of trade sanctions either,since South Africa has been selling its gold all along to nationsthat didn't abide by the restrictions. So gold is perfect for you --unless, that is, you want to make money. Why? Because to stage acomeback, the metal would have to follow this contrario-scenario: thepost-recession recovery would have to be so strong that inflationwould break out like measles. Then investors would buy gold as ahedge, and bullion prices would shoot skyward. (I myself think thispossibility is rather remote, but then again I never thought TheBeverly Hillbillies would make it to a second season.) According toJames Stack, editor of InvesTech Market Analyst, a mutual fundnewsletter, you shouldn't do more than nibble at gold now, investinga total of only 3% to 5% of your holdings in funds like FidelitySelect-American Gold (3% load; up 43.1% for the five years throughAug. 1; $1,000 minimum investment; 800-544-8888) or VanguardSpecialized Gold & Precious Metals (1% back-end load; up 95.4%;$3,000 minimum investment; 800-662-7447). Increase your stake to 10%to 20% only if gold breaks beyond $385 an ounce and the capacityutilization of U.S. factories (a measure of how busy manufacturersare, published mid-monthly by the Federal Reserve), now 79.7%,surpasses 81%, signaling that inflation may rise. One caution: goldfunds, which hold the stocks of mining and refining firms, can be twoto three times more volatile than the metal itself. So to survive,you may need a propensity for low blood pressure as well as acontrarian philosophy.

QPlaying lotteries is gambling, not investing, of course. Still,perhaps you ^ could give me some information on foreign lotteriesthat solicit U.S. customers. Over the years, I've gotten mailingsfrom Canadian and Hong Kong lotteries, and I recently had a letterfrom one in Australia. Am I better off playing these or sticking tostate lotteries here in the United States?James M. StanteSan DiegoAI think any lottery is a waste because the odds of hitting thejackpot are so small -- only one in 23 million on average in theCalifornia State Lottery, for example. But if you insist on playing,at least stick closer to home. In your state, California, 36 cents ofevery dollar you bet pays for education -- an expense that you wouldotherwise have to meet through higher taxes (14 cents goes toadministrative costs; the other 50 cents comes back to players inwinnings). Contrast that to the situation Down Under. The AustralianPlayers Service, which solicited you, is a private firm located inQueensland that can buy tickets for you in a pool composed of four ofAustralia's official state lotteries. That pool returns about 60% ofrevenues to winners -- 10 percentage points more than the Californiagame. But APS pockets some of the loot for expenses and profit -- itwon't say how much -- and you can safely bet that the Californiaschools don't see a penny. If all that doesn't discourage you, thenponder your criminal liability. Buying lottery tickets through themail violates federal law. And although overworked U.S. Attorneys areunlikely to indict you, they could if they wanted (penalty: up to twoyears in jail and a $1,000 fine). Peter Morgan, a spokesman for APS,claimed not to know about that U.S. law. He said he would have toseek some legal advice on the matter. Good idea, mate.

QSome years ago, the brokerage industry cut back on issuing stockand bond certificates to investors and started handling purchases inbook-entry form instead -- meaning that the only proof you owned theshares was in the brokerage firm's records. Recently, my broker, whoholds some bonds for me in this fashion, threatened to levy a $50annual service fee on inactive accounts like mine. I tried to closethe account, but the firm said it could not issue me a certificate ofownership. The only way I could avoid the fee was to move my account-- still in book-entry form -- to a discount broker that levies nocharge. How can I get proof of ownership so I won't be so vulnerableto the vicissitudes of brokerage houses?Millicent F. McCathrenPittsburghAI agree that it is nasty for brokerage firms to insist that almostall securities be held as book entries and then charge you a $50inactive-account fee when you could hold the certificates yourselffor zip. But judging by the letters I get from people who have loststock and bond certificates, you are probably better off relying on abroker's storage system than on your own. As to your ownershipquestion, relax: your purchase confirmation and brokerage statementsare valid legal proof of ownership (if you have misplaced them, askfor copies). And should your broker go under, the Securities InvestorProtection Corporation, a government-chartered organization,guarantees individual accounts up to $500,000 (for more about theSIPC, see Money Update on page 29).

QI am writing on behalf of my mother, who has multiple sclerosisand is confined to a wheelchair. Last May, she bought a van through aNew Mexico company that converts vehicles for the handicapped. Thecost was $19,358 for the van with an additional $14,220 charge forthe modification. As required by law, the company added on $358 inluxury tax -- 10% of the amount over $30,000. I don't see how thiscan possibly be regarded as a luxury. Do we have any recourse?Kim PfautzOaklandANot right now. Sure, nobody would argue that a new van for ahandicapped person constitutes a luxury. But the current tax coderequires that you treat the purchase and modification of a vehicle asone transaction if they occur within six months of each other. Theonly potential solution is to put pressure on Congress to change theluxury tax law, which was passed just last year. Unfortunately, aproposed amendment to do so is part of a larger Tax SimplificationAct that is stalled in the House Ways and Means Committee, where alltax legislation must originate. Chances of its emerging this year areuncertain at best. So, readers, prod your congressmen to fix thisoversight (for which they are partly responsible), and send naggingletters to Dan Rostenkowski, the chairman of the House Ways and MeansCommittee (1102 Longworth House Office Bldg., Washington, D.C.20515). There is one bright spot you should know about: the pendingbill would be retroactive to Jan. 1, 1991. So your mother may somedayget her money back after all.